Determining the Value of Information in Justifying Decision Support Systems

Abstract

The application of information systems in organizations and management requires expenditures that need to be justified by estimating their benefits. Justifying these systems was relatively straightforward when their focus was on data and the automation of manual operations. However, as the emphasis shifted to information, the justification for necessary investments became more complex. Consequently, cost-benefit analysis emerged as one of the stages in the development of information systems. This analysis, particularly concerning decision support systems, faces even greater challenges. The complexity and interaction of benefits, the impossibility of quantifying many of them, and the difficulty of determining the economic value of information as the primary output of these systems are among the main difficulties. In this article, after reviewing the evolution of information systems and the changing nature of their benefits, the description of decision support systems and their benefits is provided. The issue of determining the economic value of information is then discussed, followed by an examination of the concept of value in economics and the challenges of determining the value of information from the perspective of information economics. Finally, a model of the information space is presented, demonstrating its application in determining the value of information.